September 1, 2017

On July 1^, 2017, South Carolina passed a law requiring businesses with certain alcohol permits to prove that they have liquor liability insurance coverage in place with at least $1 million coverage in order to renew their alcohol permit.  The permits that fall under this new rule are those that allow on premises drinking after 5 pm.  If you hold one of these permits, then you will need to prove that you have liquor liability insurance in place in order to renew your permit.

This new ruling seems to be a reaction to an event that happened in South Carolina. A Dillon police officer was paralyzed and brain damaged after being hit by a drunk driver.  The driver had no insurance coverage and the bar that served this driver carried no liquor liability insurance.  Neither of these two parties had the assets needed to cover the losses to this police officer and his family.  As a result, the city of Dillon found itself next in line for the liability expenses of this accident.  This soon proved too high a price even for the town of Dillon to absorb.  This case inspired the SC legislature to respond with a new law that requires business that serve alcohol after 5 pm for consumption on their premises to have $1,000,000 of liquor liability insurance in place before they can renew their alcohol permit.

What does this mean for you? If you are a resident of SC, then over time as more bars and restaurants are forced to purchase liquor liability insurance, you should be less likely to suffer an uncompensated loss if you are hit by an intoxicated driver.  If you are a bar or restaurant owner, then this is a wake up call to double check your coverages to be sure that you have this protection in place.  If not, you can technically wait until your alcohol permit expires before you will be forced to purchase this coverage.  But in reality, going a day without it seems like too much risk.  This is the kind of loss that can absolutely run you out of business should it happen to you.  Liability risks are unpredictable, both in timing and scope and insurance is the only sure way to provide your company with some protection.

How does it work?  Liquor liability insurance is rated based on your gross sales of alcohol.  Ultimately, most policies charge a stated rate per $1000 of gross alcohol sales.  We have seen rates as low as $2 per $1000 of sales and as high as $25 per $1000 of sales.  The reasons for this wide discrepancy in rates are really based on the different kinds of situations in which those businesses with on premises alcohol consumption find themselves.  For instance, if your ratio of alcohol sales to food sales is relatively low, then you can expect a much lower liquor liability insurance rate.  If you are a bar that closes earlier, your rates will be lower than on that stays open later.  Live entertainment can often contribute to a higher rate.  If you would like to learn more about exactly how much this coverage will cost your restaurant or bar, please feel free to call us at 877-687-7557 or visit us online at www.scliquorinsurance.com.

August 31, 2017

Liquor liability insurance is an important but underutilized insurance protection that any establishment that sells alcoholic drinks for consumption on their premises should consider purchasing. Many bars and restaurants do not fully understand this insurance policy and as such go without this important protection.  Some don’t purchase liquor liability because of the cost of the coverage, others mistakenly believe that their general liability insurance provides this protection and still others are just unaware of this kind of insurance policy in the first place.  We are seeing a trend in states where several are now requiring proof of liquor liability insurance in order to renew your alcohol permit.  States where this is in force include Massachusetts, Rhode Island and South Carolina.

 

So what kind of loss does liquor liability protect for the bar or restaurant owner? Simply stated, if you serve alcohol to a patron who then goes out and causes property damage or bodily injury to a third party, and if you are held liable for these damages because you over- served this patron, then liquor liability insurance is the insurance coverage that you need in place to protect you from this third party liability.

 

Many bar owners might say that they are very careful and do not over serve their customers and therefore they don’t need to purchase this kind of insurance policy. Sadly though, that is not the only determining factor in who might face lability and lawsuits.  I have seen several different cases where a patron leaves one bar, relatively sober, and then visits two other bars as the evening goes on, leaving each one progressively more intoxicated than the last.  The drunken patron later causes an automobile accident and kills a young driver and all three bars that served the drunken patron over the past 8 hours are sued.  Often they all end up having legal bills and a liability judgement against them.  So this exposure is not just one that you can control with your internal procedures.  When a loss exposure is this far out of your control, insurance is the best way to protect your business and personal assets.

 

Once you have determined that liquor liability insurance is needed, how do you decide what limit of coverage to purchase? Generally I would advise that you purchase as much as you can afford.  The problem here is that your exposure to loss is essentially unknown and unlimited.  There is no way to predict the extent of your liability to an unknown third party before an accident happens.  Given that, buying more than you need would certainly be safer than buying less.

 

Your liquor liability insurance policy will be rated based on your gross sales for alcohol. You will need to make an estimate of those sales for the 12 month period of time that the policy will be in force.  At the end of the policy term, the insurance company will ask for your actual alcohol sales during that time period.  If you had underestimated this sales number, then you will owe the insurance company an additional premium.  If you had overestimated your sales, then you will be due a refund.

 

If you want more information, or if you need help setting up a liquor liability insurance policy for your restaurant or bar, please feel free to call us, toll free, at 877-687-7557 or visit our website at www.clinardinsurance.com or www.SCLiquorInsurance.com.